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Gyeongju, South Korea, is making headlines today after announcing that it is investigating tax evaders’ virtual asset possessions through crypto-exchanges. According to reports, the area has seen an increase in the number of tax evaders, with municipal officials seeing the crypto-space as a safe harbour for them to park their funds.
According to a local survey, taxpayers disguised their tangible properties as intangible assets, including corporate profits, real estate sale fees, donations, and inherited land. To combat such illegal activities, the city has decided to collect and seize the money of payers who have massive arrears and have hidden their assets using virtual currency.
According to a new update to the “Special Financial Information Act,” South Korea’s Financial Services Commission (FSC) has informed companies concerned with virtual properties, including cryptocurrencies, that they must register their transactions to the government body and comply with pre-requisite anti-money laundering obligations.
In particular, updated guidelines propose that all virtual asset companies, including crypto-exchanges, must first recognise and check their customer base before reporting any suspicious transactions in order to combat money laundering.
Businesses concerned with virtual assets who want to introduce themselves must still keep the FSC informed, and those that are currently in business have six months to disclose the same, or face a fine of up to 50 million won.
These updates were made in response to the FSC’s growing worries about illegal transactions.
According to reports, four exchanges, including Bithumb and Upbit, in collaboration with Gyeongju-si and Gyeongbuk-do, will assist the government in identifying all defaulters. This coalition exemplifies the overall goal of creating a fully “independent” crypto-ecosystem.
These transactions are intended to target and scrutinise the virtual properties of all defaulters with arrears of 10 million won or more.
The report added,
“The city plans to identify 511 people in delinquency of 10 million won or more, and 68 people are designated as secondary taxpayers of corporations to determine whether they own virtual assets.”
In a statement made by the mayor of Gyeongju, Joo Nak-young said,
“We are engaged in various dispositions in order to collect arrears for high-income and high-quality arrears.”
Gyeongju raised 4.4 billion of the 21.8 billion in arrears brought over from the previous year and plans to recover the remainder by introducing the above mechanism and establishing a recognition cycle for arrears in the first and second halves of the year.
South Korea has been working hard in recent months to bring an end to illegal activities associated with illicit multi-level marketing schemes (MLMs) and fake initial coin offerings (ICOs) (ICOs).
South Korea, on the other hand, has become a relatively crypto-friendly nation. According to a recent study by Korea Investments & Securities, existing financial institutions are embracing virtual properties.
“Established financial systems are increasingly considering embracing virtual assets with the trading of such assets increasing worldwide and Bitcoin becoming more and more likely to act as the center of the ecosystem of such assets.”